Correlation Between Fubon MSCI and Gigasolar Materials
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Gigasolar Materials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fubon MSCI and Gigasolar Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon MSCI Taiwan and Gigasolar Materials, you can compare the effects of market volatilities on Fubon MSCI and Gigasolar Materials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fubon MSCI with a short position of Gigasolar Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Gigasolar Materials.
Diversification Opportunities for Fubon MSCI and Gigasolar Materials
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Gigasolar is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Gigasolar Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigasolar Materials and Fubon MSCI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fubon MSCI Taiwan are associated (or correlated) with Gigasolar Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigasolar Materials has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Gigasolar Materials go up and down completely randomly.
Pair Corralation between Fubon MSCI and Gigasolar Materials
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.49 times more return on investment than Gigasolar Materials. However, Fubon MSCI Taiwan is 2.06 times less risky than Gigasolar Materials. It trades about 0.09 of its potential returns per unit of risk. Gigasolar Materials is currently generating about -0.01 per unit of risk. If you would invest 8,370 in Fubon MSCI Taiwan on August 26, 2024 and sell it today you would earn a total of 5,805 from holding Fubon MSCI Taiwan or generate 69.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Gigasolar Materials
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Gigasolar Materials |
Fubon MSCI and Gigasolar Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Gigasolar Materials
The main advantage of trading using opposite Fubon MSCI and Gigasolar Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Gigasolar Materials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gigasolar Materials will offset losses from the drop in Gigasolar Materials' long position.| Fubon MSCI vs. Fubon Hang Seng | Fubon MSCI vs. Fubon SP Preferred | Fubon MSCI vs. Fubon NASDAQ 100 1X | Fubon MSCI vs. Fubon TWSE Corporate |
| Gigasolar Materials vs. Trade Van Information Services | Gigasolar Materials vs. Insyde Software | Gigasolar Materials vs. C Media Electronics | Gigasolar Materials vs. Formosa Chemicals Fibre |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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